Advanced WACC Calculator

WACC Terminology and Explanation

Market Value of Equity (E):
The market value of equity represents the total value of a company's shares in the market. It is the amount investors are willing to pay for the company’s equity based on its stock price. To calculate it, multiply the stock price by the number of shares outstanding. You can find these values on financial platforms like Bloomberg, Yahoo Finance, or the company’s own financial reports.

Market Value of Debt (D):
The market value of debt refers to the total value of a company’s debt, reflecting the amount the company owes to creditors. If the company has publicly traded bonds, this value is calculated by multiplying the bond’s current market price by the number of bonds outstanding. If not, you can use the book value of debt as an approximation, available in the company’s balance sheet.

Cost of Equity (Re):
The cost of equity represents the return that investors expect to receive from investing in a company’s equity. It is the rate of return required by shareholders, considering the company’s risk. It can be estimated using the Capital Asset Pricing Model (CAPM), which uses the risk-free rate, beta, and expected market return to calculate the cost of equity. Risk-free rate and beta values are publicly available on financial data platforms.

Cost of Debt (Rd):
The cost of debt is the effective rate a company pays on its borrowed funds. This can include interest payments on bonds and loans. For publicly traded bonds, you can calculate the yield to maturity (YTM) as the cost of debt. If the bonds aren’t publicly traded, you can use the interest rate on the company's debt obligations, which is available in financial statements.

Corporate Tax Rate (T):
The corporate tax rate is the percentage of a company’s income that it must pay in taxes. This rate is typically set by the government and can be found in the company’s financial reports or official tax regulations in the jurisdiction where the company operates.